BRITISH VIRGIN ISLANDS
BVI LITIGATION AND RESTRUCTURING – SECTION 156 OF THE INSOLVENCY ACT – APPLICATION TO SET ASIDE A STATUTORY DEMAND – SET-OFF AND/OR CROSS-CLAIM – REASONABLE PROSPECT OF ESTABLISHING A SET-OFF OR CROSS-CLAIM THAT EQUALED OR EXCEEDED (LESS THE STATUTORY PRESCRIBED MINIMUM)
This was an Application by New Plantations Limited (“NPL”) pursuant to Section156 of the Insolvency Act, 2003 (the “2003 Act”) to set aside a statutory demand that had been served on it by Emerald Plantation Holdings Limited (“Holdings”). By the statutory demand the (the “Statutory Demand”), Holdings claimed that NPL was indebted to it in the sum of approximately US$23 million (the “Debt”), under the terms of a share purchase agreement (“SPA”).
In support of its application to set aside the Statutory Demand, NPL claimed that it had a set-off or cross-claim against Holdings that exceeded the Debt. That set-off or cross-claim was said to arise, inter alia, from: (a) an alleged misrepresentation claim; and (b) a claim for damages based on an alleged breach of one or more of the warranties in the SPA. NPL also argued – initially at least – that the service of the statutory demand was an abuse of process, for it had been served in the face of an arbitration clause in the SPA. However, that latter argument was dropped at the final hearing, no doubt in light of the Court of Appeal’s decision in C-Mobile Service Ltd -v- Huawei Technologies Co Ltd (BVIHCMAP 2014/0006).